Wednesday, February 13, 2008

The Mankiw Review (should rhyme)

http://gregmankiw.blogspot.com/ is an excellent source for economic inspiration. Here is a collection of Mankiw's most recent findings summarized and translated:

Feb. 13: Advocates of greenhouse gas emissions regulation debate the merits of a "carbon tax" system versus a "cap-and-trade" system. A carbon tax would tax emissions at a steady rate. A cap-and-trade system would put a fixed limit on emissions and let the free market decide who gets to pollute. (Under a cap-and-trade system, an uber wealthy anti-emissions group theoretically could lower the emissions cap by buying up lots pollution rights and not using them.) Mankiw quotes the Congressional Budget Office arguing that a carbon tax makes the most sense: "An inflexible cap-and-trade program would provide more certainty about annual emissions than would a tax; however, that certainty would come at a cost:The cap would require too many reductions when the cost of achieving them was high and would mandate too few reductions when the cost was low."

Feb. 12: The fiscal stimulus package idea is a disaster. Many economists say we probably aren't even experiencing a recession. Others say a small recession is no big deal, since historically recessions are immediately followed by booms. Others worry about the cost of the stimulus package and the growing national debt. Mankiw estimates that the short-term growth in the national debt corresponding to the creation of each new job by means of a fiscal stimulus runs at about $336,000.

Feb. 12: Mankiw points to research (http://papers.nber.org/papers/w7512) indicating that high taxes on the rich do more to reduce GDP than high taxes on the middle class.

Feb. 10:Income v.s. consumption: Households in the top fifth of the US by income make 15 times as much, but only consume 4 times as much, as households in the bottom fifth. Does this suggest that the wealthy in America, by and large, are acting as good stewards of wealth, placing their money in the service of economic growth rather than buying lots of junk?

1 Comments:

I'm all about uber-wealthy anti-emissions groups, especially if they buy me things like electric cars powered by wind and solar power. And regarding the stimulus package, Mankiw is dead-on right (as if I would know) at least in the potential implication that the federal government has no sense beyond gaining political capital, which it will undoubtedly use to further stick each and every common citizen's head in the murky swamps of economic misinformation.